Stocks move higher as GDP revision signals economy is growing. Initial claims reported as expected.
ECONOMIC DATA
8:30 AM Personal Income
8:30 AM Personal Spending
9:45 AM Chicago PMI
10:00 AM Michigan sentiment- rev.
YESTERDAY’S MARKETS
Stocks opened higher and never looked back. The E-mini S&P opened at 1288.50 holding support at high levels and pushed higher testing previous highs at 1292.00. An initial pullback pushed the index down to 1288.00 where buyers stepped back in and the index moved once more to the early highs. After trading in a narrow range the S&P finally made new marginal highs at 1293.50 and pulled back to 1289.00 Unable to break lower, the index finally pushed above last week highs reaching 1297.00 while the E-mini Nasdaq got as high as 1924.00. The lack of selling kept the markets near the highs boosted by lower crude oil prices and the classical end of month bullish bias. After making a marginal new high, the S&P pulled back to 1293.75 following a mild “profit taking” on the Nasdaq but once more buyers stepped in driving the S&P slowly to new daily highs printing the 1300.00 mark on the charts and pulling back a bit into the close while the Nasdaq sold off during the last minutes of the session. For the day, the S&P was up 16.00 points closing at 1298.00, the Nasdaq closed 3.75 points up at 1905.50 and the Russell gained 13.70 points and settled at 745.00. The Dow posted a very strong session with a 212 points advance ending the session at 11715.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “However, as I mentioned yesterday, markets keep showing divergences between the Nasdaq and the S&P, and yesterday’s highs on the Nasdaq looks like a top after this last bounce. So looking at the daily charts on the S&P, we have a double bottom just above the 1261.00 area and we have last Friday’s high around 1292.00-1294.00 that remains intact. The extremely low volumes could make difficult for the S&P to break this trading range, but once the breakout occurs, it could result in a strong move that last for a couple of weeks, if the breakout is to the upside, the index should reach 1320.00-1340.00, but if the weakness on the Nasdaq continues to press markets lower, then the S&P should test levels below 1230.00.The end of month “bullishness” should keep the markets from falling apart. So, for today’s trading session, keep in mind that if the Nasdaq support the S&P by trading higher, reaching last week 1292.00-1294.00 area could be a good objective for the session, but if the S&P trades in negative territory and the Nasdaq is weak, then 1270.00-1268.00 should be tested before the markets bounce holding on the current range.”
Yesterday’ strong session on the S&P and Dow has posted those indexes on a very strong position where further strength looks possible despite the weakness on the Nasdaq that keeps lying around support. Volumes are extremely low and today probably will be lower once the first part of the session is over as traders have already left for this long weekend. The fact that the S&P closed above the 1291.00 area placed that index once more on its way to the 1320.00-1340.00 area which could be reached during the next few weeks while the Dow runs to the 12000-12100. But not everything looks so nice; the continuous weakness on the Nasdaq is a red flag that at some moment will press the S&P to move lower. The trading conditions are very difficult at this period of the year, the ultra light volumes are typical during the last two weeks of August, but now volumes are even lower that the normal average and this keeps the fewer traders practically on the sidelines. The Nasdaq may give us the indication for the next big move, if yesterday’s highs get broken, getting much higher on the S&P will be a question of days, but failing to hold above the 1880.00 on the E-mini Nasdaq will result in a fast and wide fall for the S&P and Dow. The fact that the S&P did not trade below my 1261.00 area is quite bullish and shorts will have troubles moving the index lower for more that a one day profit taking session.
Today’s trading session will be a result of the pre-opening and early data, with the markets showing bullishness higher prices could be seen if the numbers come out as expected, but the recent rally could also show some pullback in front of this holiday weekend. So early strength could be sold near the resistance levels, but breaking and holding above the 1300.00 area will indicate a pop to the 1310.50 area.
TODAY’S SESSION
For today’s trading roadmap and intraday updates, please read the authors bio.
NEXT MONDAY MARKETS WILL BE CLOSED IN OBSERVANCE OF THE LABOR DAY HOLIDAY, FUTURES WILL CLOSE EARLY AND WE’LL PLACE OUR NEXT REPORT ON TUESDAY
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 4
1315.50-1316.50
1931.50-1932.00
760.50-761.20
Resistance 3
1311.25-1312.00
1922.00-1924.00
756.30-756.80
Resistance 2
1305.50-1306.75
1915.75-1916.50
751.60-752.80
Resistance 1
1300.25-1302.50
1908.50-1910.00
746.80-747.90
PIVOT
1291.25
1906.75
740.00
Support 1
1295.50-1293.75
1902.00-1900.50
743.00-741.80
Support 2
1291.00-1289.75
1896.00-1894.00
739.40-738.30
Support 3
1284.50-1283.00
1889.00-1887.25
733.70-732.20
Support 4
1280.00-1279.00
1874.00-1872.00
730.00-729.70
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1339.64
1977.39
780.97
1333.86
1969.61
776.13
1324.50
1957.00
768.30
1315.14
1944.39
760.47
1309.36
1936.61
755.63
1300.00
1924.00
747.80
1290.64
1911.39
739.97
1287.75
1907.50
737.55
1284.86
1903.61
735.13
1275.50
1891.00
727.30
1266.14
1878.39
719.47
1260.36
1870.61
714.63
1251.00
1858.00
706.80
1241.64
1845.39
698.97
1235.86
1837.61
694.13
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1311.25
1931.25
756.70
AS DAILY LOW
1286.75
1898.25
736.20
Support, Pivot and Resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory which gives technical analysis on all the major stock index futures contract. For more of his analysis go to www.theminitrade.com Arturo can be reached at arthur@theminitrade.com
Futures and options trading involve risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. This is neither a solicitation nor an offer to buy or sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this document. The past performance of any trading system or methodology is not necessarily indicative of futures results.
